Brown Brothers to sell vineyards

The Brown Brothers move follows a drop in European markets.
Photo: Nic Walker

by
Carrie LaFrenz

Brown Brothers is looking for buyers for Tasmania’s third biggest vineyard, White Hills, as Chinese buyers close in on the Australian wine sector.

The Victorian winemaker bought White Hills and two other larger vineyards from failed timber company Gunns in 2010 for $32.5 million, including a winery, stock and brands.

Brown Brothers was unable to sell the Gunns vineyards, which until recently were covered with managed investment schemes but can now be treated as separate unencumbered businesses.

Chief executive Roland Wahlquist told The Australian Financial Review the group decided to sell two of its eight vineyards after a continued fall in European sales due to the strong Australian dollar. It will keep Hazards on the east coast and Kayena in the Tamar Valley.

“This is part of a overall restructure of our business triggered by falling sales volumes in traditional export markets in the UK and Europe," he said. “Our UK revenue is only about 10 per cent of what it was five years ago and that was our largest export market. We’ve been delaying these changes for some time hoping to see a rebound in the exchange rate but can’t see any change."

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The auction comes only weeks after Tasmanian Premier
Lara Giddings
announced the government would pour $1.2 million in grants into the state’s wine industry in a bid to quadruple wine production in the next decade.

Mr Wahlquist said it was too early to put a price on the 84-hectare White Hills property, where pinot noir and chardonnay grapes are grown, or the 60-hectare Whitlands vineyard in King Valley, which mostly grows grapes for sparkling wine.

He said there had been interest from international private buyers and there could be interest from local wine producers, given the shortage of grapes in Tasmania. Brown Brothers currently sells grapes to some Australia’s largest wine companies .

“We expect strong interest," he said. “We have been selling grapes from that vineyard since we took over. The Tassie wine industry is strong but we need to simplify our business and grow what we need to make our own wine, rather than grow grapes for sale."

Chinese groups may also be interested. This week COFCO, China’s largest food conglomerate, confirmed plans to buy two or three wineries in Australia and the US , looking to expand its wine sales while fending off competition from surging wine imports.

COFCO plans to spend at least $20 million to buy prominent local brands. It expects to complete the deals within the next two years, China Foods’ managing director Luan Xiuju told a news conference in Beijing on Monday.

Wine industry sources believe COFCO might be interested in Barossa Valley Estate, which collapsed earlier this year and has attracted the interest of Woolworths.

COFCO visited the Barossa Valley two months ago and is also believed to have seen Peter Lehman Wines, Grant Burge and Murray Street Vineyards.

The company has talked up interest in buying Australian wine assets as part of plans to release an Australian version of its Chinese wine label Great Wall.